Why a Hess flashback today?
- Goldman Sachs names Oasis as top energy pick.
- Sun Trust Robinson names Whiting as top energy pick.
- Merrill Lynch recommends Hess as (a) top energy pick.
- ML team recently spent three days on the ground in the Bakken
- buy recommendation; target: $115 (currently $80)
- Hess transitioning into pure E&P play, led by the Bakken
- price target based on potential of the Three Forks
- Hess' "flagship" -- its Bakken play
- "We maintain our view that Hess is amongst the most attractive value stocks of the large cap US oils - and with the catalysts to release value over the next year."
Bakken upside adds $10/sh: 140,000 boepd realistic by 2018
If there was one key message from management, we believe it is that the Bakken, and in particular the Three Forks, is both bigger and more productive than previously thought. Hess is already drilling 100% of wells on pads; but recognizing the potential of the TF, management looks poised to step its drilling pattern to levels that increase resource potential by 1/3rd and NAV by ~$10/sh. Separately, we believe a stable/growing international asset base sets Hess apart from international E&P peers with Norway the single asset that is materially underrepresented within consensus expectations.